AUTO-OWNERS INS CO V FERWERDA ENTERPRISES INC
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STATE OF MICHIGAN
COURT OF APPEALS
AUTO OWNERS INSURANCE COMPANY,
FOR PUBLICATION
April 9, 2009
Plaintiff/Counter DefendantAppellant/Cross-Appellee,
v
No. 277574
Mason Circuit Court
LC No. 05-000436-CZ
FERWERDA ENTERPRISES, INC., d/b/a
HOLIDAY INN EXPRESS LUDINGTON,
Advance Sheets Version
Defendant/Counter PlaintiffAppellee/Cross-Appellant,
and
DARYL BRONKEMA, Next Friend of JACKSON
THOMAS BRONKEMA, CALEB ANDREW
BONKEMA, and SAVANNAH JOY
BRONKEMA, and DARYL BRONKEMA and
MELISSA BRONKEMA,
Defendants-Appellees.
Before: O’Connell, P.J., and Bandstra and Gleicher, JJ.
O’CONNELL, P.J. (dissenting).
I respectfully dissent.
The majority determines that the endorsement to the Holiday Inn’s insurance policy is
ambiguous. I disagree. In my opinion, the endorsement is well written and perfectly clear. The
endorsement provides coverage for bodily injury caused by smoke or fumes from equipment
used to heat a building. All parties to this action agree that the boiler and the attachments to the
boiler were used to heat the pool building. The parties also agree that smoke, fumes, or vapor
from this heating unit and its attachments may have been responsible for the bodily injury
sustained by the individual defendants. Applying the endorsement language to the facts of this
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case, it is clear that insurance coverage exists for fumes or vapor emanating from this heating
unit.1 I would affirm and adopt as my own the learned decision of the trial court.
1
One issue presented to this Court is whether cleaning agents such as chlorine, muriatic acid,
bleach detergents, drain cleaner, or other types of disinfectants are pollutants within the meaning
of the Holiday Inn’s commercial insurance policy. I conclude that this issue is not outcomedeterminative in this case and its resolution is best left for another day. However, I agree with
the majority’s statement in footnote three and the indication that to date no court has classified
chlorine as a pollutant when it has been used to clean swimming pools. I concur with the
majority’s opinion that the context in which a product is used may be useful in determining
whether the product is a pollutant. Stated another way, the use of a product may make the terms
of an insurance contract ambiguous to the ordinary reader.
The conceptual difficulty that bedevils presentation of this issue in the present case is
attributable to the use of the term pollutant in the insurance policy and the common
understanding of that term among most people in our society. In particular, the use of this term
in the contract leads to a deceptively simple question: “What is a pollutant?” In this case, the
insurance policy provides a definition: “pollutants” are “any solid, liquid, gaseous or thermal
irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste.
Waste includes materials to be recycled, reconditioned or reclaimed.” But this definition merely
requires us to re-pose our original question and ask, “What is an irritant or a contaminant?”
Years ago, this Court, referencing an opinion by the United State Supreme Court, stated:
The phenomenon of identical words meaning different things, even in a
single document, such as an insurance contract or statute, let alone in two separate
documents, is neither unique to the case at bar nor to the elasticity and inherent
limitations of the English language. Nat’l Organization for Women, Inc v
Scheidler, [510] US [249, 258]; 114 S Ct 798; 127 L Ed 2d 99, 109 (1994)
(recognizing that the statutory term “enterprise” in 18 USC 1962 [a] and [b] does
not import an economic motive that is required in conjunction with the term
“enterprise” in 1962[c] because “enterprise” was used in two different senses in
the different subparagraphs). [Cavalier Mfg Co v Employers Ins of Wausau, 211
Mich App 330, 341; 535 NW2d 583 (1995).]
The fact that one word may have multiple meanings depending on its use only adds to the
confusion. Moreover, lower courts have been instructed to discern the meaning of a word by
examining it carefully in its proper context. In Tyler v Livonia Pub Schools, 459 Mich 382, 390391; 590 NW2d 560 (1999), our Supreme Court stated:
Contextual understanding of statutes is generally grounded in the doctrine
of noscitur a sociis: “[i]t is known from its associates,” see Black’s Law
Dictionary (6th ed), p 1060. This doctrine stands for the principle that a word or
(continued…)
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(…continued)
phrase is given meaning by its context or setting. State ex el Wayne Co
Prosecutor v Diversified Theatrical Corp, 396 Mich 244, 249; 240 NW2d 460
(1976), quoting People v Goldman, 7 Ill App 3d 253, 255; 287 NE2d 177 (1972).9
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9
United States Supreme Court Justice Antonin Scalia has clarified the
meaning of this rule by the example he uses in his recent book, A Matter of
Interpretation. We repeat it here: “If you tell me, ‘I took the boat out on the
bay,’ I understand ‘bay’ to mean one thing; if you tell me, ‘I put the saddle on the
bay,’ I understand it to mean something else.” (Princeton, New Jersey: Princeton
University Press, 1997), p 26.
__________________________________________________________________
The idea of a word meaning something different in light of the surrounding language relates
closely to the issue raised by this case: In what context is a chemical a pollutant? By defining a
pollutant as an irritant or a contaminant, the insurance policy links a chemical’s status as a
pollutant with its desirability in a particular context. But this definition leads to yet another
question: Is it possible to define a product as a pollutant for some purposes and as a nonpollutant for other purposes? The insurance policy precludes insurance coverage if “the
pollutants are brought on or to the premises, site or location in connection with such operations
by such insured, contractor or subcontractor.” But is a chemical that is brought to the premises
for a desired purpose a “pollutant”? When does a chemical become a pollutant?
I offer this example. Under some insurance policies, fluoride would be considered a
pollutant. If fluoride were dumped in large quantities into a stream, lake, or unapproved landfill,
state and federal agencies would complain, the guilty party would be prosecuted, and any
insurance policy would exclude coverage for the resulting harm to the environment. In this case,
fluoride would be a contaminant. However, if a city or municipality were to add fluoride to its
municipal water system, few people would claim that the city or municipality had polluted the
drinking water supply, even though cities are prohibited from adding pollutants to drinking
water. In certain amounts and among certain populations, the addition of this chemical into the
water serves a purpose (preventing tooth decay) and is desired. Flouride, in this situation, would
not contaminate the water supply and would not be a pollutant.
A similar situation exists in this case. The Holiday Inn typically added chlorine to pool
water to serve as a disinfectant. The chlorine did not contaminate the water, because its presence
served a purpose and was desirable. However, if water containing the same concentration of
chlorine were served to guests to drink, that water would be considered contaminated and,
therefore, polluted, because it contained a substance that was not desired for the water’s intended
purpose, namely, drinking. The question whether this water is contaminated and, therefore,
polluted depends on the surrounding circumstances. Accordingly, the term “pollutant” is
ambiguous under the terms of this policy.
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I. Endorsement Language
The Holiday Inn’s insurance policy included an endorsement entitled, “Amendment of
Pollution Exclusion—Exception for Building Heating Equipment.” Prefacing the title appear the
words, “This endorsement changes the policy. Please read it carefully.” Below the title, the
endorsement states, “This endorsement modifies insurance provided under the COMMERCIAL
GENERAL LIABILITY COVERAGE FORM.” The endorsement deleted subparagraph f(1)(a)
of the pollution exclusion provision and replaced it with the following language:
Under SECTION I—COVERAGES, COVERAGE A. BODILY INJURY
AND PROPERTY DAMAGE LIABILITY, 2. Exclusions, exclusion f.,
subparagraph (1)(a) is deleted and replaced by the following:
This insurance does not apply to:
f. (1) “Bodily injury” or “property damage” arising out of the actual,
alleged or threatened discharge, dispersal, seepage, migration, release or escape of
pollutants:
(a) At or from any premises, site or location which is or was at any time
owned or occupied by, or rented or loaned to any insured. However, this
subparagraph, (a), does not apply to “bodily injury” if sustained within a building
at such premises, site or location and caused by smoke, fumes, vapor or soot from
equipment used to heat a building at such premises, site or location.
II. Facts
As the majority states in its opinion,
The boiler used to heat the pool water serves as the primary source of heat
for the entire pool building. Curtis’s affidavit explains, “There are no heat ducts
from any source in the pool pump room. The sole source of heat for the pump
room is the heat given off by the integrated pipe and boiler system.” Gerald
Gregorski, a mechanical engineer, also supplied an affidavit, which attested that
the pool “lose[s] heat through the processes of convection and evaporation,” and
as a result heats the air space in the building housing the pool. Gregorski’s
affidavit continues, “Because of heat loss through convection and evaporation,
pools require the use of a heater to maintain a constant water temperature. A
system that pumps pool water into a boiler to heat the water and pumps the heated
water back into the pool heats the building where the pool is located.” Plaintiff
retained engineer Michael T. Williams to inspect the Holiday Inn’s pool
equipment. At his deposition, Williams conceded that “the only source of heat for
the pool building at issue in this litigation in the Holiday Inn Express that requires
the use of equipment is the heating of the pool water by the boiler in the utility
room.” Williams expressed that apart from solar heat entering the pool room’s
windows, he did not know of any source of heat besides the boiler. [Ante at 2.]
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III. Conclusion
Endorsement f(1)(a) of the modified pollution exclusion provision clearly provides
coverage if bodily injury is “caused by smoke, fumes, vapor or soot from equipment used to heat
a building at such premises, site or location.” The facts indicate that the boiler and attachments
used to heat the pool constituted the sole heating unit for the pool building and, therefore, was
“equipment used to heat [the] building.” In my opinion, the endorsement provided coverage for
this unfortunate occurrence.2
I would affirm the orders of the trial court.
/s/ Peter D. O’Connell
2
Plaintiff also argues that subsection f(1)(d)(i) excludes coverage under the facts of this case
because the Holiday Inn brought chlorine and muriatic acid, which it claims are both
“pollutants,” onto the hotel premises for operational purposes. Although these chemicals add a
different dimension to the equation, their presence is not outcome-determinative to this issue.
All parties appear to agree that if smoke, vapor, or fumes had emanated from a traditional
heating unit (such as a regular boiler or furnace) instead of a boiler used to heat a pool, coverage
would exist under the policy. In my opinion, this is a distinction without a difference. Both the
furnace and the boiler require either gas or fuel oil to operate efficiently. This endorsement
would nullify itself if plaintiff were allowed to disclaim coverage because the Holiday Inn
brought gas or fuel oil (which could also be considered pollutants) onto the hotel premises for
operational use. The chemicals did not cause the injury; rather, the fumes emanating from the
heating unit did.
Also, I note that if an endorsement is in conflict with an exclusion, the terms of the
endorsement prevail. As the majority states in its opinion:
[E]ndorsements often are issued to specifically grant certain coverage or
remove the effect of particular exclusions. Thus, such an endorsement will
supercede the terms of the exclusion in question. When a conflict arises between
the terms of an endorsement and the form provisions of an insurance contract, the
terms of the endorsement prevail. [E]ndorsements by their very nature are
designed to trump general policy provisions, and where a conflict exists between
provisions in the main policy and the endorsement, the endorsement prevails.
[Ante at 6 (quotation marks and citations omitted).]
In my opinion, the endorsement prevails over the exclusion in subsection f(1)(d)(i).
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